Streaming video company Netflix said it will go deeper into the field of video games, because increasingly fierce competition in movie and TV streaming services is expected to lead to weak user growth, and the anti-epidemic lockdown measures that make people stay at home have been cancelled.
The company’s stock price hovered at $531.10 in after-hours trading on Tuesday.
Netflix is experiencing the impact of a sharp slowdown in customer growth after the stay-at-home order issued to curb the new crown epidemic promotes a significant increase in business in 2020. In the United States and Canada, Netflix reported losing approximately 430,000 users in the second quarter, marking its third quarterly decline in the number of users in 10 years.
The company said that it is in the early stages of expansion of video game products, and these games will be provided to users for free. It will initially focus on mobile games.
“We believe that games are our other new content category, similar to our expansion into original films, animations and scriptless TV,” the company said in its quarterly shareholder letter.
Chief Operating Officer and Chief Product Officer Greg Peters said in a video interview after the earnings report that this multi-year effort will start with “relatively small” games and is related to Netflix’s popular content.
Netflix has been involved in video games, several of which are related to dramas such as Stranger Things and The Dark Crystal: Age of Resistance.
Some analysts said that after years of rapid expansion, Netflix needs to find new ways to boost subscriptions. According to data from eMarketer, by the end of 2021, Netflix’s streaming video subscription revenue in the United States will shrink from nearly 50% in 2018 to 30.8%.
The company expects to add 3.5 million users from July to September. According to analysts surveyed by Refinitiv, Wall Street’s forecast is for an increase of 5.5 million.
In the quarter just ended, Netflix added 1.54 million new users, which was higher than the 1.04 million predicted by analysts. As of the end of June, the total number of users was 209 million.
Netflix’s interest in games was highlighted earlier this year by The Information and confirmed last week by Bloomberg. Netflix recently hired former Electronic Arts executive Mike Verdu as president of game development to head up Netflix’s gaming division.